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Philippine Airlines announced Saturday that it expects to resume full domestic and international operations starting November 24, 2011 for its winter schedule following the
streamlining and spinoff of three of its non-core businesses.

Domestic and International flight operations should all be operating at Terminal 2 from that time as third party service providers build up and complete manpower
requirements for airport services, the airline said in a statement.

But the airline is studying whether to recall some of its domestic flights to terminal 2 from the current Terminal 3 considering that the airline has grown capacity operating from the current terminal.

“Terminal 2 is already too small for us,” PAL president and
chief operating officer Jaime J. Bautista said in a recent interview.

Terminal 2 was completed in
1998 and opened for operations a year later.

Bautista said that despite being the only airline in the building,
which is an advantage PAL has over most carriers in the country that
have to share terminals with others, Terminal 2 has become too small for
the flag carrier’s needs.

Terminal 2 is split into two wings: one for PAL’s international operations and the other for domestic flights.

“The problem with Terminal 2 is our growing international passenger traffic, the airline had been
forced to use some of terminal’s domestic space for international
operations, especially during peak hours,” says Bautista.

The government earlier tried to convince PAL to move its
international operations to Terminal 3 but the airline refused, saying it would not split its
operations between two terminals. But after the spin-off a rethinking has to be made to decongest Terminal 2 for more international passengers.

Bautista said they are expecting to receive two more Boeing 777 planes next year for its international and domestic operations and they feel that there is already a need to transfer some of its narrow bodies to Terminal 3 so that they can eventually make Terminal 2 an international Terminal for PAL.

Currently, those that are operating at Terminal 2 include flights to the following domestic destinations:

The low-cost carrier penetration rate in the fast-growing domestic Philippine
market is about to reach 80%, a remarkable achievement and a figure
unprecedented in the global aviation industry. An LCC penetration rate
of 85% is even plausible in the foreseeable future as Philippine LCCs,
led by Cebu Pacific and AirPhil Express, are rapidly expanding domestically while flag carrier Philippine Airlines (PAL) continues to reduce domestic capacity.

LCC competition in the Philippine international market is expected to increase significantly, driven primarily by the launch of AirAsia Philippines,
which was originally planned for this month but has encountered last
second delays. Domestic competition, however, is not likely to increase
as AirAsiaPhilippines and the proposed Tiger Airways-SEAir
joint venture face uphill battles in their attempt to secure
authorisations for domestic operations. While international routes
linking the Philippines with other Asian countries could see intense
competition from five or more LCCs, the domestic market will likely be
served by two or at most three LCCs in future.

Cebu Pacific and AirPhil
are confident they will emerge as the big domestic winners, with
AirPhil targeting a 30% to 35% share of the domestic market. Cebu
Pacific is positioned to remain the market leader with roughly a 50%
share while full-service carrier PAL is likely to see its share erode to
about 15%.

LCC domestic penetration rates reached 68% in 2010 and 75% in 2Q2011

LCC penetration rates in the Philippines have been rising steadily
over the last several years driven by rapid expansion at Cebu Pacific.
LCC penetration rates particularly surged last year, reaching 68%
compared to only 59% in 2009, primarily because of growth at two new
LCCs: AirPhil and Zest Air. AirPhil, formerly known as Air Philippines, has pursued rapid domestic expansion since rebranding and adopting the LCC model in Mar-2010. Zest, previously known as Asian Spirit, initially adopted the LCC model in 2008 and started to pursue more aggressive expansion in 2010.

Philippine CAB data shows the three LCCs combined account for 75% of
total passenger traffic in 2Q2011, compared to only 66% in 2Q2010.
Scheduled capacity data for the current week shows LCCs have a 77% share
of the domestic market in the Philippines, with Cebu capturing 44.4%,
AirPhil 20.3% and Zest 12.4%.

Cebu Pacific and AirPhil executives expect LCCs to soon start capturing nearly 80% of the Philippine domestic market.
Cebu Pacific and AirPhil are both adding significant domestic capacity
in 4Q2011, as they take delivery of several additional A320s. PAL,
meanwhile, has further reduced its domestic capacity. Over the last two
years PAL has been steadily reducing its A320 fleet, returning aircraft
as leases expire and leasing two A320s to AirPhil.

PAL and AirPhil have common owners and a close partnership which
includes codesharing on domestic routes. CAPA has been informed that PAL
is now only operating 90 daily domestic flights, down from 145 daily
flights previously. The latest capacity reductions were initially
implemented during a ground crew strike at PAL late last month but are
now believed to be permanent. AirPhil handled PAL passengers that were
inconvenienced during the strike and continues to work closely with the
flag carrier as PAL focuses more on the international market, where
there is higher demand for a premium service.

AirPhil to expand A320 fleet to 15 aircraft by end of 2012

AirPhil currently operates eight A320s and eight Dash 8 turboprops.
The carrier is planning to nearly double its A320 fleet over the next
year, with almost all the additional capacity to be deployed
domestically. AirPhil SVP marketing and sales Alfredo Herrera tells CAPA
that the carrier’s ninth A320 will enter service next month followed by
the 10th in December and two more in Jan-2012. Three more deliveries
are planned for later next year, resulting in a fleet of 15 A320s by the
end of 2012.

...“We are still a domestic player first and foremost. International is gravy,”...

Of
the four A320s to be delivered to AirPhil over the next three months,
Mr Herrera says three will be deployed domestically while one aircraft
will be used for international charters. AirPhil is now primarily a
domestic operator with only two daily scheduled international flights: Manila-Singapore and Cebu-Hong Kong. It also has regular charters to several destinations in mainland China. “We are still a domestic player first and foremost. International is gravy,” Mr Herrera tells CAPA.

By focussing on the domestic market with its first 15 A320s, Mr
Herrera expects AirPhil can be a “strong number two” behind Cebu
Pacific, capturing 30% to 35% of the domestic market. The carrier’s
A320s are being used to build up market share on trunk routes while its
eight Dash 8s are used for some of the several domestic destinations in
the Philippines that have runways that are too short for jets. AirPhil
has five 70-seat Dash 8-400s and three 50-seat Dash 8-300s with the
-300s used exclusively to operate a high frequency service from Manila
to Caticlan, the gateway to popular tourist destination Boracay Island
that is also served by Cebu with ATR 72s.

AirPhil aims to eventually pursue some international expansion, which
would allow it to increase the utilisation of its A320s. But for now
AirPhil plans to only expand its international operations via charters,
partially because traffic rights on prime routes such as Manila-Seoul are not currently available.

...the international routes are key in helping Cebu keep its costs lower than its competitors...

Cebu
Pacific has a much larger international operation, accounting for 21%
of its total capacity. While some of Cebu’s international flying is
currently not as profitable as its domestic operation, the international routes are key in helping Cebu keep its costs lower than its competitors, including AirPhil, as several of the international flights are operated during overnight hours.

Cebu Pacific to add three A320s in 4Q2011

Cebu Pacific is also adding three A320s in 4Q2011, with most of the
additional capacity being used to increase frequency on domestic routes.
The first of these aircraft was placed into service last week and used
to operate additional flights to three domestic destinations. One more
A320 is slated for delivery by the end of this month, with the last one
expected in December, giving Cebu Pacific a year-end fleet of 29 A320
family aircraft and eight ATR 72s.

Cebu Pacific’s current fleet plan includes four additional A320s in
2012, followed by seven more in 2013. As a result, it expects a fleet of
40 A320 family aircraft and eight ATR-72s by the end of 2013.
Cebu Pacific has seen its domestic traffic increase by 10% through
the first three quarters of 2010 to 6.7 million passengers. The carrier
also transported 2 million international passengers through the first
nine months of 2011, a 25% increase compared with last year. Last year
Cebu Pacific transported over 8 million domestic passengers, accounting
for 52% of the 16.6 million total passengers in the Philippine domestic
market.

Cebu Pacific’s portion of total annual domestic passenger traffic in the Philippines: 2003 to 2010

Source: Cebu Pacific, based on Philippine CAB data

...the main priority is to defend its market leading position domestically...

Cebu
Pacific is primarily focussed on defending its fortress position
domestically, aiming to exploit its first mover advantage in the local
Philippine LCC market and grow at least as fast as its competitors.
Unlike pan-Asian LCC groups such as AirAsia and Jetstar,
Cebu Pacific does not have an ambition to become a major international
player. The carrier plans to continue growing its international network,
as it helps diversify its revenue stream and keep its A320 utilisation
levels at about 14 hours per day, but the main priority is to defend its market leading position domestically.

Cebu
Pacific also plans to stick with a pure LCC model and will not be
tempted by elements of hybrid models, such as codeshares, GDSs and
corporate bookings. Cebu Pacific chief executive advisor Garry Kingshott
told an IATA conference in Singapore
earlier this month that airlines pursuing “blurry models” typically
have lower profit margins than pure LCCs or FSCs.

“In this industry you
are either a low-cost producer or a high differentiator,” Mr Kingshott
said. “Everyone who gets mixed up will lose money.”

Cebu Pacific uses travel agents locally in the Philippines as credit
card usage remains relatively low in the country but connects with them
via the web. Mr Kingshott is adamant Cebu Pacific will not turn to the
GDSs. “We have far more success today in using Twitter and Facebook as
booking channels,” he said. “We’re in a very complex business.
Everything you touch seems to complex up for whatever reason.”
Cebu Pacific’s insistence on remaining pure to the LCC model could
provide an opening for AirPhil to follow a more hybrid model. AirPhil
already codeshares with PAL and could pursue partnerships with foreign
carriers seeking improved access to domestic destinations in the
Philippines as full-service carrier PAL continues to increase its focus
on the international market. AirPhil already offers some frills, such as
free checked luggage, in an attempt to differentiate its product from
larger Cebu Pacific. In Singapore it also decided to use Terminal 2
instead of following Cebu Pacific into Changi’s budget terminal.

...following a hybrid model comes at a cost...

However, as Mr Kingshott pointed out, following a hybrid model comes at a cost.
AirPhil’s costs on domestic trunk routes are already higher as its A320
fleet is smaller and utilised less (Cebu Pacific enjoys more economies
of scale with its much larger A320 fleet and utilises its A320s on
average about two more hours than AirPhil, primarily because Cebu
Pacific now does a lot more international flying).

Cebu Pacific also now
has a cost advantage over AirPhil on the turboprop routes because the
ATR-72 has lower per seat costs than the faster but generally less
economical Dash 8. AirPhil also uses a legacy reservation system from Sabre.
Its codeshare with PAL also adds cost, although this cost is offset as
the AirPhil seats sold by PAL are typically higher-yielding than seats
sold by AirPhil directly.

Future of Zest Air appears more uncertain

There is clearly room in the Philippine domestic market for at least
two LCCs and it would make sense for AirPhil to differentiate itself
from Cebu Pacific by following a slightly different model. Zest Air,
which currently operates seven A320 family aircraft, is probably the
most vulnerable as it is the smallest of the carriers and does not yet
have the economy of scale enjoyed by Cebu Pacific or the partnership
AirPhil has with PAL.

Zest’s most valuable assets are its slots at Manila...

Zest also does not have as much cash at its disposal. Zest’s most valuable assets are its slots at Manila,
which Cebu Pacific and AirPhil would quickly swoop up if given the
opportunity. The current slot situation at Manila is currently one of
the biggest challenges limiting growth for Cebu Pacific, AirPhil and the
domestic LCC market generally. The carriers are now having to base some
of their additional aircraft at Cebu instead of Manila but believe more
slots could potentially be made available at Manila by improving the
efficiency of operations at the congested airport.

Tiger-SEAir
and AirAsia Philippines are also eyeing the domestic market. But the
incumbents are confident the status quo will be maintained and neither
carrier will secure permission to operate domestic trunk routes.

Tiger and SEAir joint venture remains in limbo

Tiger and SEAir initially filed for domestic trunk routes in 2Q2011
and have since been fighting a show cause order which forced them to
suspend ticket sales and postpone the launch of flights from Manila to
Cebu and Davao. Tiger has said its planned 33% investment in the joint
venture with SEAir is contingent on securing domestic rights. It is
looking increasingly likely that the application will be denied and the
proposed joint venture will fizzle altogether – similar to what recently
happened with Tiger’s planned joint venture in Thailand.

Without the equity tie-up and domestic joint venture, the marketing
tie-up which has been in place between Tiger and SEAir since late last
year on international routes could also be in jeopardy. The marketing
tie-up now includes SEAir operating two Tiger-branded A319s from
Manila's alternative airport, Clark.
Expansion of this operation has been put on hold multiple times. The
marketing tie-up and proposed joint venture excludes SEAir's existing
small turboprop domestic operation, which includes routes from Manila to
regional destinations such as Caticlan and currently accounts for 1% of
total capacity in the Philippines domestic market.

AirAsia Philippines misses launch target

The SEAir Tiger-branded international operation now faces the
prospect of competition on all of its routes from AirAsia Philippines.
The new AirAsia affiliate took delivery of its first A320 in Aug-2011,
unveiling plans to launch services in Oct-2011. AirAsia Philippines was
aiming to start by year-end linking Clark with five international
destinations – Bangkok, Hong Kong, Macau,
Singapore and Seoul – and two domestic destinations – Kalibo and Puerto
Princesa. But ticket sales have not yet begun on any of the planned
initial routes and the AirAsia Group said this week that its new
Philippine affiliate is now aiming to launch services in early 2012 as
it continues to work on securing required regulatory approvals.

...the new carrier has only received a temporary permit for international routes...

AirAsia
Philippines, which plans to operate seven A320s by the end of 2012,
should still be able to launch services on some international routes –
including Bangkok, Singapore and Macau – in 1Q2012.

But sources tell
CAPA some of the planned international routes, particularly South Korea,
are in jeopardy because of a lack of room in existing bilaterals for
another Philippine carrier. AirAsia Philippines may also not receive the
domestic licence it needs to operate the planned Clark-Kalibo and
Clark-Puerto Princesa routes. For now the new carrier has only received a temporary permit for international routes.
Its first aircraft has been sitting at Clark now for 10 weeks without a
single revenue service and a second aircraft is about to be delivered.

While AirAsia Philippines may have some initial headaches, its
ability to leverage the AirAsia brand and the group’s infrastructure
across Asia should allow it to become established as a major player in
the Philippine international market. Tiger and small local LCC Spirit of Manila
are the most vulnerable as AirAsia Philippines quickly expands at
Clark. The impact on Cebu Pacific and AirPhil should be limited because
they have the advantage of operating international flights at more
convenient Manila. They are also primarily domestic carriers and are
focussed on profiting from their enviable position in the fast-growing
Philippine domestic market.

Given the slot restrictions at Manila and the challenges Tiger/SEAir
has faced, the Philippine domestic market remains relatively closed. But
with two to three LCCs competing fiercely and an unprecedentedly high
LCC penetration rate, fares will almost certainly remain low. As a
result demand will continue to be stimulated and, as more Filipinos
start to fly more often, the domestic market should continue to chalk up
double-digit annual growth.

As Mr Kingshott
pointed out earlier this month, the domestic LCC penetration rate now
being achieved in the Philippines is without precedent in the global
industry. “It proves if you can take fares to a level where people can afford them, LCCs will succeed,” he said.

While domestic LCC penetration rates of 50% to 60% are common in some other emerging markets - such as Brazil, India, Malaysia and Mexico
- there has never been a domestic market of a significant size with an
LCC penetration rate approaching 80%. In mature markets, such as the US and several European countries, domestic LCC penetration rates are currently about 30%.

Tokyo - Aircraft parts supplier Japan Aircraft Maintenance Co., Ltd., (JAMCO) has recently opened its Philippine base at the Clark Freeport in September to manufacture composite panels and aircraft interiors designed for the latest aircraft of Chicago-based American Company Boeing, the Boeing 787, and Toulouse-based European conglomerate, Airbus S.A.S. for its upcoming aircraft, The Airbus 350.

Jamco Phils. Inc. (JPI), with initial investments worth 4 million US Dollars, will exclusively engage in the
business of manufacturing aircraft parts and equipment to both Airbus and Boeing and to provide
other services necessary to aircraft operations.

"As a leader in the design, manufacturing, and certification of aircraft
interior products, continued recognition of our on-time delivery
performance and high level of quality supports our future success,"
Norikazu Natsume, President and CEO of JAMCO America, said.

JAMCO's main Headquarters is in Tokyo with global manufacturing branches in United States, Europe, Singapore and lately, the Philippines. The company also manufactures parts for Bombardier, a Canadian based Aircraft Manufacturer. AFP

The number of passengers on international flights coming
and going into the country grew by 11 percent from January to June
2011, rising to 8.078 million from 7.269 million in the same period last
year, according to the Civil Aeronautics Board (CAB).

Included in the number are passengers booked as “non-revenue.”

Of a total of 8,035,216 million passengers recorded from
January to June, 3,934,291 were incoming passengers and 4,100,925 were
outgoing ones. Non-revenue passengers numbered 42,856.

In the same period last year, total traffic stood at 7,269,830, including 32,106 non-revenue passengers.

“The traffic continues to improve because the airline
industry as a whole is improving. Many airlines also offer cheaper fares
and many flights and the appetite to travel via airplane has come
back,” CAB executive director Carmelo Arcilla explained.

A lower court has approved the government’s petition
to put in escrow account its proffered payment of $175 million for the
expropriation of the Naia Terminal 3.

The Pasay regional trial court ordered the terminal builder,
Philippine International Airport Terminals Co., to produce a clean deed
transferring the facility to the Philippine government as a condition
for the payment, which includes a P3-billion advance.

Judge Eugenio Dela Cruz granted the petition filed by the Department
of Transportation and Communications and Manila International Airport
Authority, representing the government.Solicitor General Jose Cadiz, who
filed the petition, said the ruling would pave the way for the
resolution of the long running case.

Dela Cruz designated the state-owned Land Bank of the Philippines and
Development Bank of the Philippines as the escrow agents.

The court said the $175 million deposit will only be released to
Piatco once it submits a warranty that the structures and facilities of
the terminal are free from liens and encumbrances.

“Upon payment of the plaintiffs (government) of the said just
compensation in an escrow account, this court recognizes the Republic of
the Philippines’ right to exercise full rights of ownership of the NAIA
III structures and facilities,” Dela Cruz said in his decision.

The court held that Piatco, as owner of the Terminal 3, is the one
entitled to the just compensation as it had ruled in 2004 when it
mandated the payment to the company prior to a government takeover.

Flag carrier Philippine Airlines’ (PAL) has hired the services of Hong Kong-based Jardine Airport
Services Limited (JASL) firm to train its staff at the Ninoy Aquino
International Airport (NAIA) Terminal 2 and the Mactan-Cebu
International Airport.

Top executives of Jardine Airport Services Limited, a Hong Kong-based
service provider, flew to Manila over the weekend to assess the
situation at the PAL hub, said Sky Logistics Philippines president Rory
Jon Sepulveda.

SkyLogistics Philippines (SLP) is the local partner of Jardine Airport
Services Limited (JASL). Jardine Airport Services provides ground handling and aircraft ramp handling services, such as
loading and unloading of baggage, cargo, and mail at the Hong Kong
international airport.

In addition, it provides cargo services,
including import/export documentation, ULD control, tracing and claims,
warehouse supervision, space control, and freighter loadsheet services;
professional and support services, including business development and
support, quality assurance and risk management, human resources,
learning and development, finance, procurement, and information
technology services; and facility management services.

"Jardine is expected to come up with proposals for Sky Logistics to
improve NAIA and Mactan service based on Jardine’s experience in Hong Kong",
Sepulveda noted.

SLP intends to provide much better services at the Ninoy Aquino
International Airport Terminal 2 and the Mactan/Cebu International
Airport.

Sepulveda said JASL Managing Director Enoch Lam and two of his key
lieutenants toured PAL’s hub at the NAIA Centennial Terminal 2 with the
SkyLogistics team.

“They observed ramp operations, cargo and passenger
handling, and took note of how these can be improved based on their
experience in Hong Kong,” Sepulveda added.

“Jardine Airport Services is one of the world’s best airport service
providers. We’re honored that it has taken interest in our modest
operations. We hope we could reach an agreement soon so that our
customer, Philippine Airlines and its millions of passengers, can
benefit from their expertise,” says Sepulveda.

Albay Gov. Joey Salceda announced development of
the Southern Luzon International Airport (New Legaspi Airport) in Daraga,
Albay is in full swing and is finding investors for the redevelopment of the old Legazpi airport when the new airport opens in 2014.

"We are just waiting for the bidding of the terminal of Daraga
airport. The needed investment for the project is about P3.4 billion.
The Legazpi airport is up for redevelopment; we will make it an
integrated development like Singapore’s Sentosa," Salceda said at the
sidelines of the Orgullo Kan Bikol held at Megatrade Hall of SM Megamall held recently.

Salceda said the Bicol region, particularly the twin airports of Naga and Legaspi has been growing in double digits as it slowly become one of the top tourist destination in the country.

International tourists to Albay in the first quarter numbered
54,000, up 51 percent from last year. This year, the province expects
foreign tourists to hit 150,000.

The Department of Transportation and Communications (DOTC) is
studying a proposal to bundle the privatization of the old Legazpi
airport with the SLIA terminal construction.

Salceda said the airport is on the priority list of
private-public partnership projects. The private sector is being enticed
to develop the old Legazpi airport into something like Sentosa that can
be linked to Ligñon Hill development.

Earlier, DOTC Secretary Mar Roxas said the terminal component of the project will be funded by ODA loans and funds coming from the GAA.

According to Capt. Alejandro P. Campos, Jr., vice-president for flight operations, the aircraft did not declare emergency landing on its return.

"The aircraft took off normally... But during the flight, the pilot
saw the landing gear was not properly stowed. Rather than continue, they
went back. This was a retraction problem," he said.

The airline on Friday clarified that none of its terminated employees were involved in aircraft maintenance, saying that PAL’s fleet of airplanes are being maintained by Lufthansa Technik Philippines (LTP).

Passenger Carol Tinio, who is traveling with her son for a vacation in
Hong
Kong, reported tremors inside the plane and started praying for safety,
while German national Dirk Roessler said he was unaware of any emergency
until he saw rescue personnel following the plane after landing. Passengers
were eventually transferred to another plane, a Boeing 747 that departed past noon on the same day towards
Hong Kong.

JESSICA Cox, the Filipino-American first licensed armless pilot and
Guinness World record holder, is in the country for a vacation.

Cox, 28, arrived at the Ninoy Aquino International Airport Sunday early morning Sunday on board a Philippine Airlines flight from the United States.

She will spend a month long vacation to see her family and relatives where her mother, Inez, hails from Bobon, Samar.

In
a brief interview, she said that, "I can understand a little bit
[Visayan dialect]. I'm going to visit the family, but I don't speak it
very much".

"My right foot is on the yoke, and my left foot is
on the throttle. I use both feet, and I don't have special equipment. I
just fly the plane," she said, describing how she flies a plane.

The
Fil-Am pilot also described flying as like a butterfly in the sky
and added that it’s a big challenge being physically-challenged.

Cox is also fond of gymnastics, swimming, and martial art. She holds a double black belt in taekwondo.

"I
think it's an example of what other people can achieve as well. If I
can fly an airplane, everyone else can do what they want to do.
Sometimes we limit ourselves with our own perceptions," she said.

Cox
has a message for Filipinos: "Every one of us has a challenge, whether
it's physical, psychological, or emotional. We all have our challenges,
but we also have a choice whether to let it stand in the way, or allow
it to give us an opportunity to succeed. All of us has that option. The
choice is yours."

Telecom
czar Manuel V. Pangilinan, or MVP, has started the search for the top
executive who will steer Philippine Airlines, his next acquisition
target.
The grapevine said he had narrowed his options to individual chief
executive officers presently running the operations of companies under
the fold of the PLDT/Smart/Metro Pacific group.

The grapevine said Ricky Vargas had the slight edge over the other
candidates for the PAL position. A former Cabinet member, meanwhile,
will likely fill up the vacancy in Maynilad Water, assuming the
negotiations to acquire PAL from tycoon Lucio Tan push through.

The ex-Cabinet member is coming back to the private sector after
serving a controversial post in the government. MVP himself is lining
him up for a juicy position in the PLDT/Smart/Metro Pacific group.
Moreover, MVP can defer to him in matters concerning aviation, where he
had a successful career before joining the bureaucracy.

San Miguel’s challenge

The negotiations between MVP and Lucio Tan may still fall through.
Ramon Ang, president and chief operating officer of San Miguel Corp.,
himself said he was giving advice to the airline tycoon to solve its
financial and labor troubles. The grapevine said it would not be
far-fetched if San Miguel, Ang or his own personal group decided to make
a rival bid for the airline.

MVP, though, is bent on purchasing Asia’s oldest airline. A close
associate of MVP said Hong Kong-based First Pacific Co. Ltd. had “agreed
in principle” to acquire the flag carrier and was just waiting for a
resolution of the airline’s labor dispute before finalizing the
transaction.

The labor row stemmed from PAL management’s decision to outsource most
of its workforce requirements. At least 2,600 workers will be affected
by the arrangement.

MVP’s overtures were supported by the formation of a new aviation
company last month. PLDT, Metro Pacific Investments created Pacific
Global One Aviation Inc. with an initial capital of P400 million. Other
incorporators of Pacific Global One are Meralco Powergen Corp. and Metro
Pacific Tollways, both affiliated with MVP.

Windfall from PAL

PAL is readying a check of P2.5 billion this weekend to pay for the
separation and other benefits of about 2,400 workers who will lose their
jobs due to the company’s outsourcing program. PAL secured the funds
after signing a $50-million loan agreement with Credit Suisse AG.

The airline has assured workers from the catering, ground handling and
call center reservations units they can get their payment in full as
promised.

Workers covered by the spinoff will receive P50,000 in gratuity pay
upon receipt of termination letters and another P50,000 after signing up
with service providers.

President Benigno Aquino III, meanwhile, has acknowledged the
strategic importance of PAL’s operations. The President cited national
interest and the growing unrest in the Middle East, where millions of
Filipinos work.

The Philippines, he says, needs at least two long haul planes to fetch Filipinos wishing to leave the troubled region.

“We cannot allow our national flag carrier and all the other carriers
capable of reaching those destinations to become non-entities and lose
that ability, if there is a need to repatriate our countrymen,” says
Aquino.

Administrators of the
Aurora Pacific Economic Zone and Freeport Authority (Apeco) are eyeing
separate funding sources to facilitate early completion of its air and
seaport projects to attract more local and foreign investors to the
region.

Roberto
Mathay, Apeco president and chief executive officer, confirmed ongoing
efforts by the national government to tap the Korean Export-Import Bank
to provide $55-million funding for the seaport project under the
official development assistance (ODA) program.

Mathay said
additional funding of P92 million is being allocated by the Philippine
government in the annual national expenditure program to complete a
proposed 1.5-kilometer airport runway, under the Civil Aeronautics
Authority.

This
developed as Sen. Frank Drilon, finance committee chairman, announced
after a public hearing on Wednesday that Apeco’s proposed 2012 budget,
amounting to P332.5 million, is deemed submitted for approval, despite
opposition from restive residents affected by the projects.

“We
are going to try to track more locators to Apeco pa rin. Our mandate is
to bring varied business interests in marine-culture business, as well
as ecotourism to the zone so we can transform it to something the people
from Casiguran can be proud of,” Mathay said. “We are [also] looking at
agroindustrial or mariculture, or other businesses which are more
fitting to the area. We would like to focus on small to medium
enterprises, both from the Philippines and from abroad.”

Mathay
disclosed they have, likewise, requested funding from Congress, as part
of their capital outlay for this year, to have “a standard factory
building where we can have smaller companies establish their operations
in the zone.”

He
reported that the mariculture business at the zone include raising
bangus and tilapia and processing these to fillet or fish ball which are
then sold in the local market and nearby provinces, such as in Isabela
and Quirino. “Eventually, we may also export them,” he added.

“There
are other prospects. One company we are signing up plans to put up sea
cages. We are trying to finalize the details [for their operation]by November,” Mathay said.

Philippine Airlines (PAL) has resumed cargo services to all its domestic, Asian regional
and inter-continental flights flying out of NAIA Terminal 2 says its President over the weekend.

“We're now accepting cargo bookings for all
international flights including wide-body domestic flights that operate
out of Terminal 2.” says PAL President Jaime J.
Bautista in a statement.

“The resumption of cargo
service is a boon to freight forwarders and exporters who benefit from
the flag carrier's high-capacity, wide-body aircraft and extensive
domestic and international network.” adds Bautista.

Among the first to be loaded on PAL's cargo belly were
boxes of donated food and other vital goods from Mindanao, for
distribution to flood victims in Tarlac and Calumpit, Bulacan, the airline said.

Among the infrastructure plan is the completion of the P7.8
billion Laguindingan airport which is expected to open in 2013; followed
by the 3.2 billion Daraga Airport to open in 2014 and the P8 billion
Bohol
airport to open in 2016.

Speaking before the Makati Business Club (MBC), The Secretary said that the Aquino government will put 12.4 billion pesos for Clark International Airport to transform it as premier gateway of the country together with the construction of 108 billion Naia-Clark Express Rail Link dubbed as the New North Rail Project (Northrail) to be funded by Japan International Cooperation Agency (JICA). The High-speed NorthRail spans 100-kilometer from Centennial Terminal 2 to Clark International Airport in Pampanga, with a total
travel time of 45 minutes.

Also on the pipeline is the construction of a new passenger terminal 2 at Mactan Cebu International Airport with a budget of P10.15 billion and the P1
billion new passenger terminal to be constructed in Tacloban
airport.

DOTC has also set aside P2.07 billion for the rehabilitation of Naia terminals 1, 2 and 3 set for completion in 2014. Roxas
said plans are under way to decongest NAIA through the reduction of
corporate and air taxi flights by 50 percent of the current number of
sorties during peak hours, construction of a rapid-exit taxiway to reduce runway occupancy time, and the transfer of noncommercial flights to Sangley Point.

Airports earmarked for massive upgrades are Kalibo International Airport with P3 billion budget for new passenger terminal building and airside facilities upgrade, P4.2 billion
for Puerto Princesa Airport development project, and various airport upgrades nationwide with an P8 billion price tag. They include the airports of Laoag, Catarman, Ormoc, San Vicente, San Jose, Masbate, Borongan, Maasin, Butuan, Dipolog, Ozamiz, Pagadian, Cotabato, Davao, Zamboanga and Tawi-Tawi.

Meanwhile, five (5) new airports are going to be build in Pangasinan, Catarman, Negros Oriental, Bukidnon, and Sultan Kudarat.

The Civil Aviation Authority (CAAP) has deferred collecting a 10% increase of overflight charges within the country which was supposed to be effective October 1 after Airline Operators Council (AOC) protested for lack of proper notice and publication.

Cathay Pacific Airways through its station manager Ed Monreal brought to the attention to CAAP saying the overflight charge increase was not
published in a daily newspaper and that members of the AOC were not
duly informed as required by law.

Director General Ramon Gutierrez said the increase in overflight charges was published in 2009, during the
incumbency of Daniel Dimagiba, former head of the Air Transportation
Office but the information apparently was not widely circulated then since the Air Transportation Office (ATO), was being revamped and replaced with a new name CAAP.

The aviation authority ordered the deferment after a meeting with the AOC, which said that 30 of its airline members were not properly informed
on the increased overflight rate. The AOC has 48 members representing various aviation firms, mostly passenger airliners in the Asia Pacific Region. They include Philippine Airlines, Cebu Pacific, Zest Air, Singapore Airlines, Malaysia Airlines, Thai Airways, Vietnam Airlines, Garuda, Qantas, China Air,
KLM, Thai Airways, Taiwan Air, Cathay Pacific, Delta Airlines, Emirates,
among others.

Gutierrez agreed to defer the implementation of the increase due to some lapses and oversight within the agency to January 2012.

Gutierrez said CAAP derives P2 billion of its P3 billion yearly income from
overflights by international air carriers, crossing the Philippine Flight Information Region (FIR).

"At present, the CAAP bills the aircraft manually
for overflights, through the Air Traffic Services Division. Its personnel keep track on dozens of aircraft crisscrossing our airspace and charge them for the use
of our navigational aids (Navaids) according to distance travelled within
the FIR" says Gutierrez.

The CAAP is upgrading its capability for automation through the P10-billion Air Traffic Management/Communication, Navigation
Service (ATM/CNS) project, that hopes to do away with manual billing, instead, an automatic bill will be done by computers for prompt and accurate collection design to increase revenue of the government.

Overflight charges covers those airline flying over Philippine Airspace without making a stop-over in the country that originates or destined either in Hong Kong, Taiwan and Japan, for Singapore, Malaysia, Indonesia, Thailand,
Australia and Vietnam or the US territories of Guam or Saipan.

Haikou - China's Fourth largest airline company is buying all the minority share of Philippine low cost carrier Zest Airways.

Zest Air parent AMY Holdings together with other local investors would continue to retain 60% share of the airline company while Hainan Airlines (HU) through Grand China Holdings (HNA Group) will take 40% share in accord with Philippine Laws.

Alfredo Yao, Chairman of AMY Holdings, said its foreign partner has already started conducting due diligence of Zest Airways which take some time to finish before the actual sale but it signed a Memorandum of Understanding with officials of the HNA Group based on initial audit results of the Philippine-based carrier.

The Hainan Group's entry into Zest Air’s would paved the way for the airline to finance its aggressive expansion strategy in the Philippines for domestic and international operations as it takes nine Airbus 320 delivery in 2012.

Zest Air has a fleet of six Airbus 320 planes and four Modern Ark 60s. The company would
have 19 by next year, as it plans to mount more flights to China like more flights for its hub in
Kalibo to different provinces in China.

The carrier aims to fly Manila-Singapore route soon as well as mount flights to Taipei, Palau, Bahrain and Dammam. Zest Air currently flies to Incheon and Pusan in South Korea from Kalibo and Cebu and some Chinese province capital.

Hainan Airlines reported a first-half net profit of $104.7 million, up 20.2% compared its posted income a year ago.

ZAMBOANGA CITY ,Philippines – A combat helicopter of
the Philippine Air Force (PAF) crash-landed in a remote village in Sulu
yesterday, leaving three soldiers dead and one injured.

Western Mindanao Command (Westmincom) spokesman Lt. Col. Randolf
Cabangbang said the incident occurred in the village of Panglayahan in
Patikul around 8:30 a.m. yesterday.

There was no immediate information on the fatalities but sources said
the Huey helicopter was piloted by a certain Capt. Antepuesto and 2Lt.
Zulueta with crewman Sgt. Orkina. The identity of the fourth passenger
was not known.

Cabangbang said the ill-fated aircraft took off from Camp Bautista in
Jolo on a resupply mission to 6th Marine Battallion Landing Team (MBLT)
in Camp Baladad in Patikul.

“The UH-1H aircraft with tail number 606 encountered loss of engine
power prior to landing and the pilots initiated emergency landing at
Camp Baladad,” Cabangbang said.

“The said aircraft hit the ground hard and rolled down the hill,” he added.

Cabangbang said initial information from the accident site revealed the helicopter was totally wrecked.
He said the Joint Task Force Sulu alerted the Marines to secure the
crash site to retrieve the bodies of the dead soldiers and bring the
wounded to hospital.

The 3rd Air Division command here immediately ordered the
grounding of the Huey helicopters while an investigation on the cause of
the accident is ongoing.

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Welcome to our blog. The Philippine aviation scene has plenty of surprises in store. We are trying to chronicle the relevant events from orbital satellites to human powered flights and all in between as we possibly could. We are also trying desperately hard to be accurate and factual as far as possible. Humans as we are we do sometimes err. Our apologies for trying to let you know to the best of our knowledge which sometimes fell short. We however value your time reading it and please do contact us for some corrections. Our heartfelt thanks for dropping by.

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